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Dear [FIRSTNAME]

Nick Clegg, tax avoidance and good accountancy practice

At the Liberal party conference Nick Clegg was the latest Government spokesman to talk about clamping down on tax avoidance.He even went on to talk about avoiding tax as being an ethical question.

I’d say a bigger ethical question is how our taxes are spent by government. Indeed if people felt their taxes were being spent wisely and fairly they may have more time for the ethics of high taxation.

What’s all the fuss about?

It is probably worth looking at the distinction between evasion (illegal) and avoidance (legal). Tax avoidance involves a tax payer arranging their financial affairs in such a way that they minimise the amount of tax they pay. Indeed there is case law upholding the taxpayer’s right to do just that.

As accountants working with owner managed business we would have few clients if we didn’t help them arrange their finances to pay less tax. Remember it is all about the profits that you keep, not the profits that you earn.

Is it really fair that business owners take on the risks of business ownership and should they be successful risk losing half of the profit made to the tax man? The higher the tax rates climb...

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